The British pound surged against the dollar this morning as Kristin Forbes’ speech on the outlook for the UK economy was released by the Bank of England.

Forbes, who is an External Member of the Monetary Policy Committee, will deliver the speech tomorrow during a regional visit to Leeds.

Today’s reaction in the pound was primarily driven by Forbes’ views on interest rates. In her speech, Forbes makes the case that a hike in interest rates would not have any significant negative consequences on the British economy:

“It is worth highlighting that an increase in interest rates, however, given today’s extremely low level of Bank Rate, and the substantial amount of monetary stimulus that is already in place through a variety of programs, would still leave a substantial amount of monetary support for the economy.”

Additionally, Forbes says that exchange rate fluctuations in the pound, along with consumer confidence metrics, will be driven mainly by "dynamics of the UK’s negotiations with the European Union."

At press time, the pound is trading around 1.2517 against the dollar - 1.35 percent higher than where it was trading this morning. News of Kristin Forbes’ speech erased most of the losses the pound incurred during the London trading session.

While the pound has pared back some of the gains, at the height of the rally, the GBP/USD currency pair hit a high of 1.2546 (+1.50% off the daily lows) - a price not seen since February 2, 2017.